Contract design is crucial for enterprise businesses that want to stay ahead. Businesses that hope to scale efficiently are beginning to take contract design more seriously.
Contract design is more than supplying a .pdf for signatures. It’s a user experience that sets the tone for how a prospect or customer interacts with a business.
At PactSafe, we believe contracts should be designed around the needs of the business and the desired user experience. This is where the common phrase digital transformation comes into play. Innovative businesses, like Google, Amazon, Uber, and enterprises alike are continually moving towards digitizing the way they interact with consumers. This consumer-driven economy has forced businesses across all industries to shift the way they interact with customers.
This interaction is shifting to be mobile-focused. Consumers purchase everything on-the-go through mobile apps, as well as receive services through mobile devices. Major banks provide mobile depositing, grocery stores offer mobile ordering and delivery.
So, shouldn’t your business workflow align with your front-end user experience? Enter: contract design.
Companies need to optimize their internal processes for greater efficiency and adopt a more digitized approach to their workflows. Or, fail to meet customers where they are, and therefore fail in business. Contracts are an elemental part of a business workflow that can be digitized and instantly improve customer experience (and increase overall revenue).
Inefficient contracting can cause bottlenecks in your business
According to Business Law Today, approximately 95% of businesses still manage contracts manually.
SpringCM’s 2018 The State of Contract Management Report stated that many enterprise businesses still use spreadsheets, shared drives, or email to manage their contracts. Also, 74% of respondents say that human error often or very often impacts their contracting process. Even more, most report that their biggest problems are tracking, approvals, workflow, e-signature, and storing contracts.
Within your enterprise business, there are likely several departments and even more stakeholders redlining, approving, and managing clauses in your contracts at any given time. If this hasn’t changed, it might be because:
- You want to be thorough and cross every t and dot every i;
- You don’t know how to move fast while maintaining control;
- It’s just the way you’ve always done it.
Whereas your need to be thorough is what makes you a good general counsel, there is absolutely no reason to continue to do something that doesn’t work because that’s the way you’ve always done it. Each of these problems can, and should, be remedied with good contract design.
How contract design has transformed legal departments
Additionally, good contract design is needed at enterprise businesses because improving your contracting process can save thousands, if not millions, in annual revenue. Effective contracting:
- Reduces the number of hours spent on contracting by 20-50% (Goldman Sachs via Contractlogix)
- Leads to 90% renewal rate (Aberdeen Group via SpringCM)
- Saves 40% on contract administration costs (Icertis).
Old contracts cannot do business in this new world. In order to get ahead, you need to design your contracts to reflect your ideal state at enterprise business.
Learn how to design your enterprise contracts for high-velocity acceptance.